Intangible Infrastructural Capital

By intangible infrastructural capital, I mean knowledge about other people acquired by individuals in the course of their daily lives when interacting with, and relating to, other people, even superficially, within the different sorts of communities to which they belong. The concept of intangible infrastructural capital could properly be expanded to include language and law and traditions of various kinds, but for purposes of this post, I prefer to focus chiefly on a narrow subset of the entire class of knowledge that might fit into the category. By knowledge, I don’t mean factual or scientific knowledge, I mean expectations about what people will do or how they will react under a variety of conditions or circumstances. I call this knowledge capital, because almost all knowledge has some value and usefulness, and this knowledge is acquired only through the expenditure of some effort, even when the knowledge is acquired more or less incidentally in the course of actions that people take or activities in which they engage that bring them into contact — regular contact — with other people. Thus, the assets are acquired and maintained only by way of some minimal investment of time and effort to form such relationships, however superficial. The assets are intangible, because the assets are almost never embodied in physical form, rather existing only in the minds and memories of individuals, available for use when particular circumstances make that knowledge useful. The assets are infrastructural, because, like physical infrastructure – roads, public utilities and the like — they create an environment in which people are able to pursue their own interests and formulate and execute their own plans to advance those interests. The individual pieces of knowledge are more meaningful and useful in the aggregate than they are considered as separate bits of information, because the aggregate of knowledge helps people coordinate expectations in a way that allows their lives to be conducted on the basis of shared mutually consistent expectations about how each other will behave.

The above, overly long, paragraph is probably written too abstractly for most readers who managed to slog through it to have gained a clear understanding of what I am talking about. So let me try to make my ideas more concrete (no pun intended) by quoting from Jane Jacobs’s extraordinary book The Death and Life of American Cities. (pp. 45-47)

A well-used city street is apt to be a safe street. A deserted city street is apt to be unsafe. But how does this work, really? And what makes a city street well used or shunned? . . .

A city street equipped to handle strangers, and to make a safety asset, in itself, out of the presence of strangers, as the streets of successful city neighborhoods always do, must have three main qualities:

First, there must be a clear demarcation between what is public space and what is private space. Public and private spaces cannot ooze into each other as they do typically in suburban setting or in projects.

Second, there must be eyes upon the street, eyes belonging to those we might call the natural proprietors of the street. The buildings on a street equipped to handle strangers and to insure the safety of both residents and strangers, must be oriented to the street. They cannot turn their backs or blank sides on it and leave it behind.

And third, the sidewalk must have users on it fairly continuously, both to add to the number of effective eyes on the street and to induce people in buildings along the street to watch the sidewalks in sufficient numbers. Nobody enjoys sitting on a stoop or looking out a window at an empty street. Almost nobody does such a thing. Large numbers of people entertain themselves, off and on, by watching street activity.

In settlements that are smaller and simpler than big cities, controls on acceptable public behavior, if not on crime, seem to operate with greater or lesser success through a web of reputation, gossip, approval, disapproval and sanctions, all of which are powerful if people know each other and word travels. But a city’s streets, which must control not only the behavior of the people of the city but also of visitors from suburbs and towns who want to have a big time away from the gossip and sanctions at home, have to operate by more direct straightforward methods. It is a wonder cities have solved such an inherently difficult problem at all. And yet in many streets they do it magnificently.

In the space of a few short paragraphs, Jacobs covers two different, but not unrelated, kinds of intangible infrastructural capital, the more comprehensive knowledge about the conduct of particular known individuals in smaller face-to-face communities, and the sketchy knowledge of the behavior of mostly unknown individuals in the big city. In both contexts, people feel a need for safety and an expectation that they will not be the victim of an attack on their person or property. In the small face-to-face community, people tend to know a lot about their neighbors; in the city they don’t know as much. An effective city street provides a feeling of safety by being occupied by a steady stream of foot traffic, a stream encouraged by having a mixture of businesses, stores, shops, restaurants, bars, and residences on the same street. People living and working on the street may not know very much about the people they see, but their personal stake in maintaining good order on the street encourages feelings of responsibility even to those passersby with whom they have no personal connection. Jacobs describes an incident in which people living or working on her street were moved almost instinctively to come to the aid of an unknown passerby who seemed to be in danger: (pp. 49-50)

The incident that attracted my attention was a suppressed struggle going on between a man and a little girl of eight or nine years old. The man seemed to be trying to get the girl to go with him. By turns he was directing a cajoling attention to her, and then assuming an air of nonchalance. The girl was making herself rigid, as children do when they resist, against the wall of one of the tenements across the street.

As I watched from our second-floor window, making up my mind how to intervene if it seemed advisable, I saw it was not going to be necessary. From the butcher shop beneath the tenements had emerged a woman who, with her husband, runs the shop; she was standing within earshot of the man, her arms folded and a look of determination on her face. Joe Corncchia, who with his sons-in-law keeps the delicatessen, emerged about the same moment and stood solidly to the other side. Several heads poked out of the tenement windows above, one was withdrawn quickly and its owner reappeared a moment later in the doorway behind the man. Two men from the bar next to the butcher shop came to the doorway and waited. On my side of the street, I saw that the locksmith, the fruit man and the laundry proprietor had all come out of their shops and that the scene was also being surveyed from a number of windows besides ours. That man did not know it, but he was surrounded. Nobody was going to allow a little girl to be dragged off, even if nobody knew who she was.

I am sorry – sorry purely for dramatic purposes – to have to report that the little girl turned out to be the man’s daughter.

For large collections of, mostly anonymous, individuals to interact with reasonable expectations of personal safety, those individuals must hold confident expectations of safety, expectations supported by the knowledge that they will be visible to others who could help them should they be endangered. That is why cities and urban neighborhoods thrive when there is a lot pedestrian traffic and decay when that traffic dwindles. People feel safe when they can walk in places where a lot of other people are walking or watching. Jacobs became the scourge of urban planners and advocates of urban renewals who wanted to create planned self-contained residential communities without that healthy organic mix of small business and shops and high density residences that draw people onto the streets, infusing those neighborhoods with an energy absent from monotonous planned single-use communities. High population density is an important condition that allows neighborhoods to achieve the vibrancy of diverse mutually supporting activities.

Jacobs justly became a famous, almost legendary, public figure through her epic battles with the ultra-powerful, seemingly invincible, urban planner and infrastructure builder, Robert Moses, who wanted to decimate Jacobs’s beloved Greenwich Village community, turning it into an urban renewal project while running a super highway through lower Manhattan. The magnitude of Jacobs’s achievement in standing up to, and ultimately thwarting, Moses’s designs on her neighborhood, stopping the juggernaut in its tracks, is memorably described in Robert Caro’s monumental, award-winning biography of Robert Moses, The Power Broker:  Robert Moses and the Fall of New York.

While the devastating implications of what Robert Moses wanted to do to lower Manhattan in 1960 are now widely acknowledged, it seems to me that we still have not arrived anywhere near a proper understanding of the scale of destruction inflicted on communities, both urban and rural, by the interstate-highway system, still widely regarded as one of the great achievements of the federal government in the second half of the twentieth century, perhaps the chief domestic achievement of Eisenhower administration, and often cited as a model by contemporary advocates of physical infrastructural investment. The massive interstate highways, cutting through every major urban center in the country, destroyed countless urban neighborhoods and communities, uprooting many hundreds of thousands of residents, and forcing thousands of small businesses out of existence. Beyond those direct effects, there were much wider indirect effects, the new highways not just destroying the structures in their direct paths, but interrupting and disrupting the previous patterns of pedestrian and vehicular traffic on the city streets they dismembered, thereby rendering nearby businesses and communities not directly swallowed up by the highways economically unsustainable. The destruction of those neighborhoods and communities, disproportionately occupied by minorities and low-income families, often herded into newly constructed, large-scale, utterly dysfunctional, urban-renewal projects, had devastating consequences on residents, contributing to and exacerbating the social pathologies associated with the breakdown of formerly stable communities. Even in the big cities, where the “web[s] of reputation, gossip, approval, disapproval and sanctions, all of which are powerful if people know each other and word travels” are less constricting than those in small towns, those informal social controls are not entirely absent or ineffective. The destruction of communities and neighborhoods by interstate highways cutting right through them meant the annihilation of the intangible infrastructural capital by which basic standards of acceptable conduct could be transmitted to, and enforced upon, young people, or at least some of them, some of the time. The collapse of communities meant a collapse of standards. The construction of new physical infrastructure led directly to the destruction of a much more valuable intangible infrastructure of social standards and restraints on anti-social conduct.

I also conjecture that the construction of interstate highways spelled doom for many rural communities dependent on traffic flows along, or connected to, the formerly well-traveled highways bypassed by the new interstates, contributing to and accelerating the migration of young people from rural areas and small towns to major metropolitan areas, again causing a breakdown in the restraints on anti-social conduct. It was also the interstate-highway system that enabled Walmart to achieve rapid growth in sales by locating its new stores very close to major interstates, which gave the new stores a huge advantage over their small local competitors off the interstate-highway system, competitors less accessible both to customers and to the large trucks delivering merchandise from wholesalers and manufacturers. Little by little the economic vitality of small communities off the interstate-highway system was drained out of them, causing many of those communities to wither and shrivel up. In the case of Walmart, at any rate, President Obama’s now infamous remark “you didn’t build that” was eminently justified. Of course, the irony and tragedy is that it actually was built.  Would that it weren’t!

This post is not meant to as an attack on investing in tangible infrastructure. I actually think that the return on many kinds of physical infrastructure is pretty high. But we ought to be more aware than we seem to be of the disastrous consequences that the construction of the interstate-highway system had on individuals, families, neighborhoods, communities, towns and cities, all across the country. And we should at least be somewhat mindful of the risks that future large-scale investments in physical infrastructure could have similarly unfortunate unintended consequences.

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16 Responses to “Intangible Infrastructural Capital”


  1. 1 W. Peden August 23, 2012 at 5:37 am

    Great post. Here in Scotland we have countless examples of the ignorant destruction of social capital by governments, that have had negative fiscal multiplier effects because of their impact on the natural rate of unemployment. Here are just a few-

    (1) Housing estates with many of the same problems as your “projects” in the US, albeit with far fewer guns. Rather than improve city centre slums, entire communities were uprooted and taken to desolate wind-swept patches of bland greenery and stuffed into leaky high-rise flats, with no shops and poor public transport links. After the 1970s, housing allocation was done in such a way as to encourage separation of rich and poor by giving the poor priority for public housing, creating an effective economic apartheid system in cities like Glasgow and Edinburgh which is still very visible today. These communities were then used as examples of the evils of the market!

    (2) After 1962, the central government seems to have decided that since just about everyone had or was going to have a car (not true in poorer parts of the UK like Scotland) it was time to gut the railway system. Towns like mine, which have major roads going through, survived the loss of railways well enough. Other towns, like Penicuik, have never since recovered and there are whole areas south of Edinburgh with high unemployment but no means of cheap and convenient transportation to full-employment Edinburgh.

    (3) The scandal of “New Towns” – people were lured out of Glasgow and Edinburgh into towns with large heavy industrial enterprises. Some of these towns, like Glenrothes, were based on industries that only lasted a few years. Others, like Motherwell (Ravenscraig was a steel plant with no local source of iron ore, no navigatable water-routes and 25 miles from the sea) lured people into isolated areas to work on subsidy-dependent specialist heavy industrial jobs, leaving them in a kind of hell when the subsidies were withdrawn.

    (4) All wage-raising measures, since Scotland is naturally a relatively low-wage economy and it was on that basis that we developed so rapidly in the 18th, 19th and early 20th century (until the advent of the welfare state, in fact).

    Rather than encourage any sort of scepticism of government or even the slightest degree of economic liberal feeling in the general public, all these measures have encouraged Scotland to become the reddest country of the UK. 50% of Scots voted for right-wing parties in 1955, but only about 18% do so today. Handicapping a country’s economy and then making it so dependent on the state that any sort of rolling back of the state is political suicide is an astonishingly absurd road to serfdom.

    I live in a Highland town which is dependent on the tourism industry. If the government built a large road bypassing my town, then it would not only destroy a large area of picturesque countryside (our main local resource) but also ruin most of our local economy. Wouldn’t that be a “negative multiplier” in the long-run, as the taxpayer would have to subsidise the impact of the destruction of our town’s economy?

    Once the assumption of homogenous capital is relaxed, the kind of rapidly-implemented (and therefore poorly consulted) infrastructural projects that are idolised by Keynesians become disturbing and the inference of a positive multiplier becomes totally untenable. I find it hard to credit government infrastuctural investment with the successes of private enterprise when the same investment is not held accountable for its effects on unemployment, poverty and crime.

  2. 2 W. Peden August 23, 2012 at 5:42 am

    To clarify: I agree with your that infrastructural investment is not always bad and is often necessary, but Keynesian stimulus is committed to very rapid infrastuctural investment (otherwise it becomes procylical) that will inevitably be poorly planned.

    It would also be a good idea to start holding the state accountable for its failures in this regard as well as its successes, which I imagine Americans are much better at doing than we in Scotland. Our reaction to a road to nowhere would be to praise the government for being so compassionate towards sheep! (Or blame private industry for building such a road using government funds, as in the disastrous Edinburgh tram scheme.)

  3. 3 Becky Hargrove August 23, 2012 at 6:16 am

    Enjoyed this post: your agument is also why I would like to see more mobile and dynamic forms of ownership in the 21st century until people find ways to live that make more sense. We could utilize hi tech pull-apart recycleable plastic pieces to make housing and commercial structures and give our much maligned forests a break, not to mention our legal and financial systems that now strain under the load of obligations not possible to meet.

    The economic reality of automobiles was certainly a mixed blessing. It created economies of scale that hollowed out the very core of society and Jane Jacobs fought a brave battle to preserve that core. The effect of course was hardest on rural areas. Some years ago my mother came to visit when I lived in the mountains of the Ozarks. She suffered a cut close to her eye so I called a nearby clinic but they were due to close shortly before we could get there. Fortunately a neighber had the right skills – and bandage – to pull the wound together and by the time we checked the next day it was healing nicely. But it should not have required a two hour drive to a hospital (where my husband was a patient) to check Mom’s eye!

    Doctors sometimes plead with their patients to move closer to town. But not every patient has the resources to do that. We need to take care of our social infrastructure before we can really think about the physical one, this time.

  4. 4 Philo August 23, 2012 at 10:43 am

    Why are you so worried about “future large-scale investments in physical infrastructure”? The government seems less interested in such investments than ever before, as it focuses on *transferring* already existing resources among people.

  5. 6 Benjamin Cole August 23, 2012 at 6:21 pm

    Uneasy Money becomes an urban planning blog!

    Great post.

  6. 7 Jacques René Giguère August 23, 2012 at 6:46 pm

    But these “improvements” were at first made with a lot of enthusiastic support from the crowd.
    I remember how,in my native city (Québec City, Québec, Canada),in the early ’60’s the mock-up of the highway projects that would raze the Chinatown, obliterate the St-Sauveur area, destroy the Côte-d’Abraham, flatten half of Limoilou, dry the ecologically vital Canardière marshes. deprive Beauport from access to the river and defigure the cliff over the Saint-Laurent , were welcomed with ouhs and ahs of delight. They seemed so modern and so much old useless things would disappear.
    Today, fortunately, 2/3 weren’t built and some interchanges have been destroyed and some transformed into ground street. One interchange is even used for a Cirque du Soleil permanent summer show

    https://www.google.com/search?hl=en&q=les+chemins+invisibles

    .
    Up on the cliff, René-Lévesque and Honoré-Mercier have been retransformed from a highway into their original boulevard shape. Downtown is now liveable again. and is both a huge tourist attraction and the site of the software industry.
    But it took forty years and the central city big stores and cinemas,essential to city life, never came back.

  7. 8 John August 25, 2012 at 3:52 am

    What a fantastic indictment of conservatism.

    Interstate highways are what happen when you have people who refuse to tax and spend for the future. The moment man first realized that automobiles were possible the need for interstate highways in the United States was inevitable. And yet no city or region accepted or planned for such, notwithstanding the lessons of the demands of railroads.

  8. 9 W. Peden August 25, 2012 at 7:00 am

    John,

    “The moment man first realized that automobiles were possible the need for interstate highways in the United States was inevitable.”

    Not at all. Mass motor ownership was neither inevitable nor necessarily forseeable. Many things are possible, but for unforseen reasons don’t catch on-

    http://en.wikipedia.org/wiki/Sinclair_C5

    And how would 19th century government authorities know when mass automobile ownership would occur?

    Hindsight is 20/20, but 9/20 vision of the future in the present is impressive.

  9. 10 OGT August 26, 2012 at 4:46 am

    In my home state, Nebraska, most rural communities are dying because the scale of agriculture keeps growing with less and less labor required, meaning fewer non-tradable services are needed as well.

     Also, retail has tended to consolidate in a path dependent manner in the largest regional centers, think Wal-Mart.  Admittedly, that process has been aided by state highways built in the sixties and seventies that connected rural communities to each other. But, arguably, most people consider themselves better off with better access to markets and a wider variety of goods and services.

  10. 11 John August 26, 2012 at 7:58 am

    read Munger’s essay on the value of the Coca Cola company

    if anyone thought at all about trucks and automobiles, they would have seen exactly where events were going

  11. 12 David Glasner August 29, 2012 at 2:48 pm

    W. Peden, Thanks for that very impressive and depressing list of infrastructural investments gone awry. I actually did not write this post to show that infrastructural spending has a long-run negative multiplier, but you make a very convincing case. It’s hard to figure out what the long-run effects of large-scale building projects will be, but we ought to be a lot more cautious about them. We tend not to realize that social systems like ecological systems are often in a delicate balance and that just as big projects like dams can wreak havoc on ecological systems, big projects like public housing and superhighways built through neighborhoods can wreak havoc on social systems.

    Becky, E. F. Schumacher wrote a short book many years ago called Small Is Beautiful, which was unjustly maligned by many as a piece of anti-capitalist propaganda, but there was a lot of wisdom in that book even if it was a bit starry-eyed.

    Philo, I worry about a lot of things. Some I write about, some I don’t.

    impropertyrights and Benjamain, Thanks.

    Jacques, Very true. People thought these big projects were great. People who questioned building superhighways and urban renewal projects were considered enemies of progress. That was the greatness of Jane Jacobs. You Canadians were lucky to have gotten her when she left New York for Toronto. But even she couldn’t stop all the progress.

    John, You are confusing different uses of the term planning.

    W. Peden, Well said.

    OGT, There was no reason why the process that you are describing had to take place in one generation rather than three.

    John, I deny that there was only one possible outcome. If that were the case, there would be a six or eight-lane highway running through Greenwich Village now.

  12. 13 Becky Hargrove August 29, 2012 at 6:17 pm

    It’s been at least thirty years since I read it! Remember the last part of the title? Economics as if People Mattered. Here’s a few tidbits from page 105:
    “There are always some things which we do for their own sakes, and there are other things which we do for some other purpose. One of the most important tasks for any society is to distinguish between ends and means-to-ends, and to have some sort of cohesive view and agreement about this…Anything we do just for the sake of doing it does not lend itself to utilitarian calculation…man-as-producer and man-as-consumer is in fact the same man.”

  13. 14 Tom Megan September 3, 2012 at 7:53 am

    The same story can be written about Boston and Chicago as well. In 1968 as a student at Georgetown I was privileged to participate in a sustained series of civil disobedience protests that prevented the building of the so called Three Sisters Bridge that would have formed the backbone of a highway system intent on destroying a range of Washington DC neighborhoods from the rich Georgetown neighborhoods to the poorer African American communities. Needless to say the asymetric power of the Georgetownites helped the Black Churches that would have been pulverized win over the planners. Not so in southwest DC that was redeveloped.

  14. 15 David Glasner September 3, 2012 at 3:29 pm

    Tom, Good for you. Thanks for sharing your experience. There were such interesting coalitions on both sides of the issue. There is probably a lot to be written on this subject. I hope there will be someone to do it while those who were involved at the time are still around to tell us what happened.

  15. 16 Taz von Gleichen October 7, 2012 at 10:39 am

    I would to see that money go into railways, buses, and other public transportation. As we are so fare behind on that. Other nations have spend huge amounts on that. I agree I do believe that the return is huge on infrastructure spending.


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About Me

David Glasner
Washington, DC

I am an economist at the Federal Trade Commission. Nothing that you read on this blog necessarily reflects the views of the FTC or the individual commissioners. Although I work at the FTC as an antitrust economist, most of my research and writing has been on monetary economics and policy and the history of monetary theory. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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